This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Kass: The Decade of the Temporary Worker

We can trace a number of reasons behind the movement that favors temporary workers:

  • The severity of the 2008-2009 downturn coupled with the reduced accessibility of credit has made small businesses cautious.
  • The economic recovery of late 2009/early 2010 has been shallow (by historical standards), and growth expectations have diminished -- slower growth in output translates to a reduced pace of hiring.
  • As businesses deleverage and become more cost-efficient, temporary workers represent a way to avoid the higher costs of permanent employees.
  • Temporary hiring enables a business to maintain staffing flexibility, allowing it to adjust more quickly to workload fluctuations and rapid changes in business conditions.
  • Limited or no need for employer contribution to workers' compensation insurance or unemployment, no employer liability for Social Security or Medicare taxes and no need to provide job benefits, including health insurance or retirement plans.
  • Increased economic and policy uncertainty.
  • A wedge of political and regulatory uncertainty.
  • Rising health care costs.
  • The likelihood of ever more populist initiatives favoring employees at the expense of employers.
  • The need for more specialized workers for shorter periods of commitment.
What are some of the ramifications of this new era of temporary job growth?
  • less buoyant and dynamic domestic economic growth;
  • a less consistent rate and more unstable trajectory of domestic economic growth;
  • sustained and higher-than-historic corporate profit margins;
  • less of a potential corporate commitment to permanent growth initiatives in hirings and in new capital plans;
  • less inflows into the domestic stock market through 401(k) plans and other retirement programs;
  • dampened consumer confidence; and
  • greater demand for renting over home ownership.
This trend warrants a closer look at the shares of Manpower (MAN) and Robert Half International (RHI), the two largest temporary employment companies.

While, historically, the rise in temporary job growth (above chart) signals a broader improvement in the employment markets, I am less certain in the current cycle and, for that matter, over the course of the next few years.

Economic bulls have been incorrectly predicting stronger jobs growth since fourth quarter 2009.

They have been disappointed and are likely to continue to be disappointed in the decade of the temporary worker.

Doug Kass writes daily for RealMoney Silver , a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass's daily trading diary, please click here.

At the time of publication, Kass and/or his funds had no positions in the stocks mentioned, although holdings can change at any time.

Doug Kass is the general partner Seabreeze Partners Long/Short LP and Seabreeze Partners Long/Short Offshore LP. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs